Gold edged higher on Friday as the dollar weakened, but the metal was still on track for a small weekly loss as investors weighed signals from the Federal Reserve on interest rates.
Brendon Thorne | Bloomberg | Getty Images
Gold edged up on Friday as a softer dollar lent support, while market participants focused on the US Federal Reserve’s future policy trajectory.
Spot gold rose 0.3% to $4,184.34 per ounce but was down 0.2% so far in the week.
US gold futures for December delivery rose 0.9% to $4,205.70 per ounce.
The US dollar headed for its first weekly fall in five weeks, making greenback-priced bullion more affordable for holders of other currencies.
Federal Reserve Chair Kevin Warsh voiced optimism about US economic strength but gave no preview about whether he feels more interest-rate hikes will be needed, or when.
“Fed Chair Warsh offered nothing new on policy at his IMF speech, leaving market pricing for an October hold intact and creating room for a further gold rebound in the near-term,” said Nikos Tzabouras, an independent financial markets analyst.
Traders largely expect the US central bank to hold rates steady this month, while pricing in a 91% chance of a rate hike in December, according to the CME’s FedWatch Tool.
Data on Thursday showed US producer prices increased by the most in 4-1/2 years last month, the latest indication of inflation broadening out beyond energy products. The data followed Wednesday’s consumer price report, which showed prices accelerated in September.
Although gold is typically seen as an inflation hedge, higher interest rates tend to reduce the appeal of non-yielding metal.
“A retreat in yields and the US dollar would pave the way for gold to resume its rise above $5,000/oz in 2027,” analysts at ANZ said in a note.
Elsewhere, several large Indian mutual funds issued public notices late on Thursday suspending bulk subscriptions to gold exchange-traded funds.
